A Complaint recently filed in the Southern District of New York may shed light on courts’ willingness to apply a broad interpretation of “misappropriation” in trade secrets cases. Plaintiff Greenpoint Capital Management, which grants loans to law firms to fund high-stakes litigation, has accused Apollo Hybrid Value Management LP and Apollo Hybrid Value Management GP of misappropriating trade secrets in violation of the Defend Trade Secrets Act (“DTSA”). The Complaint also includes claims for breach of contract, unfair competition, unjust enrichment, and misappropriation of trade secrets under New York’s common law. In essence, Greenpoint alleges that it provided Apollo with trade secrets – namely, a “unique and proprietary method of valuing a borrower’s portfolio of cases, referred to as the ‘Greenpoint Valuation Method’” – as part of a proposed investment in the litigation finance business, and that Apollo then passed those trade secrets to a Greenpoint competitor, Kerberos Capital Management LLC. Greenpoint alleges that in February 2020, it engaged in meetings with Apollo about a possible investment in litigation finance, and that it shared with Apollo details about its Valuation Method, subject to a non-disclosure agreement. Greenpoint then claims that its email-logging software showed that a February 2020 email to Apollo containing confidential documents was opened by an individual in or near Illinois. Apollo asserts that “Kerberos’ approach to litigation finance and its marketing deck” – which, it alleges, had previously been “rudimentary” and “employed generic techniques” – dramatically changed, becoming more sophisticated and “reveal[ing] that Kerberos adopted significant aspects of the Greenpoint Valuation Method.”
Notably, Kerberos is not – yet – a party to the litigation. To prevail, Greenpoint will need to establish that Apollo – not Kerberos – violated the DTSA by “misappropriating” the trade secrets in question. Under the DTSA, misappropriation includes unauthorized disclosure of a trade secret by a person who, at the time of disclosure, knew (or had reason to know) that the trade secret was “acquired under circumstances giving rise to a duty to maintain the secrecy of the trade secret or limit the use of the trade secret.” The dispute for the court to resolve will likely revolve around the scope and enforceability of the non-disclosure agreement, as well as whether the information was in fact disclosed to Kerberos (rather than just being opened by an authorized person located in Illinois).
The case is Greenpoint Capital Management v. Apollo Hybrid Value Management, 21-cv-01654, U.S. District Court, Southern District of New York (Manhattan).